The number of catfish processing facilities has varied over time as processing plants have been built, closed, restarted, and sold. Since a peak of catfish processing companies in 1990, the number of processors has fluctuated between 25 and 28 processors. There are four multi-plant processors with capacities greater than 50 million pounds/year, 12 with capacities between 10 to 50 million pounds/year, and three companies with 5 million pounds/year. These, combined with the very small facilities, comprised a total processing capacity of 676 million pounds of liveweight catfish in 2000.
As catfish farming continues to expand within and outside the traditional four-state region (Mississippi, Arkansas, Alabama, and Louisiana), additional processing companies are likely to enter the industry. However, it has been difficult to sustain operations without a guaranteed supply of fish, particularly in new or expanding catfish production areas. Some plants pay premium fish prices and transport fish long distances to keep plants working at full capacity. Competition for fish from traditional production areas from plants in non-traditional areas is expected to increase, at least until sufficient local production can be developed to supply new plants.
Processors generally deal with many wholesale or retail customers, and they thus have a market for different sized fish. For this reason, processors will generally allow more latitude in the size distribution of fish than may be permissible through some other market outlets. A final advantage of selling to a processor is that the processor bears the majority of the liability for any problems related to product safety or quality.
Of course, selling to a processor is not without its disadvantages. The primary disadvantage is that the producer is a price taker. That is, the producer has very little ability to try to negotiate a higher price with the processor. This situation is common to most producers of agricultural commodities. It is also worth noting that a producer is not guaranteed to be able to sell to a processor at any given time. Processors do generally handle a large volume of fish, but from time to time, even large processors may not need to make additional purchases.
Given the weak bargaining position, it is to the producer’s advantage to have as much information about regional processors’ operational characteristics. Key information would include:
historical prices paid for fish from the plant as compared to other plants;
dockage rates (poundage or percentage deducted from the total delivery amount) for non-target fish, out-of-size fish, or other reasons;
required stock purchases and/or billbacks;
payment frequency to growers and typical length of time between the time of delivery of fish and receipt of payment;
delivery volume requirements;
fish size requirements;
quality standards and checks;
delivery quotas and scheduling patterns;
availability of contracts and requirements; and
state bonding requirements.
The primary alternative to selling to processors is to market directly to a customer further down the marketing chain. Producers may try to establish direct sales outlets with wholesalers, retailers (e.g., local grocers or restaurants), or final consumers. The primary advantage of direct selling is that it is potentially a high-margin activity. In direct selling, the producer captures all or a large portion of the marketing margin. But direct selling is not necessarily easy. It may be difficult for an individual producer to establish business relationships with wholesalers, grocers, or restaurants. Moreover, these direct sales outlets may have very strict requirements for their suppliers.
Another issue to consider is that direct sales to local grocery stores and restaurants will probably require on-site processing unless restaurant personnel clean the fish. The ability to process fish on-site will likely require the producer to have a functioning Hazard Analysis, Critical Control Points (HACCP) plan in place. In direct selling, the producer assumes a great deal more liability for product safety or quality problems than in selling to a processor. The major problem with direct sales to consumers is that this is typically a very low volume market outlet.
Consumer Demand and Preference
The per capita consumption of all fish and seafood in the United States hit a new high in 2003 at 16.3 pounds, up from 15.6 pounds in 2002. U.S. farm-raised catfish was the fifth most consumed fish item at 1.137 pounds per capita, up from only 0.41 pounds per capita in 1985. In a recent survey of U.S. farm-raised catfish consumers, respondents stated that their reasons for eating catfish include:
enjoyment of flavor (68% of consumers),
health and nutrition (31%),
and addition of variety to their diet (22%).
The main reasons for not consuming catfish more often were:
lack of fresh product availability (16%),
lack of preparation knowledge (14%), and
too time consuming to prepare (13%).
Survey respondents that were located in “non-traditional” catfish consumption regions of the U.S. stated that they would eat more catfish if a good product was continuously available and secondly, if a variety of ready-to-eat products were widely available.
An important aspect of consumer preference relates to product form. Processors have responded to consumer preference by producing 60 to 70 percent fillets, 10 to 15 percent whole-dressed fish, 10 to 15 percent nuggets, and 10 to 15 percent value-added breaded, marinated, or strip/finger products.
Frozen fillet products have had the greatest increase both in volume and in sales. Processors sell approximately 50 percent of frozen product to distributors, 30 percent to national restaurant chains, and 20 percent to direct end users. Frozen products consist mainly of fillets, strips (from the whole fillet), or nuggets. Approximately 80 percent of fresh catfish products go to retail grocery stores or supermarket chains and the remainder to chain restaurants. Fresh catfish sold to retail groceries are usually in whole dressed, fillet, or nugget form. This preference for frozen over fresh fillets will likely continue, while fresh whole-dressed fish will continue to be favored over frozen whole-dressed fish.